RUSSIA: X5 Retail To Maintain Aggressive Expansion Pace, Aims To Double Market Share

The X5 Retail Group has said it aims to keep opening stores at a rapid pace, as it looks to double its market share in four years.

The group, which regained the title of Russia’s largest grocer (in terms of sales), opened 2,167 outlets in 2016, taking its total as of end-2016 to 9,187 stores.  The expansion marked a rapid acceleration from the 1,537 outlets opening in the previous year.  CEO Igor Shekhterman said the group aims to open 2,000+ outlets again in 2017.

Shekhterman also said X5 is aiming to have a 15% share of the Russian market, up from around 8% currently.  He noted: “We are now working towards this ambitious target.”

The comments came after the group reported full-year revenue growth of 27.8% to 1.03trn roubles, its fastest pace of growth since 2011, even as like-for-like sales were up 7.7%.  Operating profit jumped up 32.5% to 45.6bn roubles, while net profit soared by 57.3% to 22.3bn roubles. The results were driven by growth at the Pyaterochka banner.

X5 added that sales in the year so far are up around 26%, on like-for-like growth of 7%, which it was “in line with last year’s trends. Customers remain extremely rational and continue to seek out the best prices and promos”.

NAM Implications:
  • Given their record and scale, aiming for 15% market share is not unreasonable.
  • …proactive NAMs are probably already budgeting for 25%.